It is the initial mistake that novice investors may make. They trade against the trend of the day. Remember, “the trend is your friend”.

Let’s look at a perfect example of this mistake: do you remember a company called Enron? You should know that what became known as the Enron debacle is a perfect example of investors trading against the trend.

How about a company that is one of the biggest companies on Wall Street? Do you think that such an undertaking would be a good investment for you? Probably.

However, I want to emphasize a number of things. First, there were many employees of Enron who loved the company. Most employees have even a portion of their wages as shares and options.

Did you know that during the rapid plunge, there was not even a single sell recommendation from Wall Street analyst? As the stock rose from $ 90, it had several retracements that when the stock price went down; it took a bit of increase before descending again. As it went down, what do you think investors were doing? They kept on buying. Why not, it is one of the biggest companies on Wall Street.

When the stock price of Enron reached $ 65 mark, investors were somewhat relieved. They probably said: “Well, it is now finally back.” Not so fast, the stock may retraced a bit and but it began to decrease again. Enron’s stock did this twice at $ 50 and $ 35, before falling completely off the map, so to speak. Throughout this event, inventors kept buying the stock of a dying company.